When Eve Picker and business partners at no wall productions bought the Liberty Bank Building on Penn Avenue from the City of Pittsburgh 15 years ago, they discovered it was a “green building,” just not the kind most people want.
“It was covered in green moss inside,” she remembers. “You could fly a small plane through the hole in the roof.”
With help from the Urban Redevelopment Authority (URA) and historic tax credits, Picker and co. redeveloped the century-old structure and attracted startups like Deeplocal and CivicScience by offering small chunks of office space and short, one-year leases.
In 2013, co-working space Beauty Shoppe moved into the Liberty Bank Building from their original location across the street at 6014 Penn Avenue. Slowly, suite by suite, their footprint expanded, eventually growing to take over almost half the building. Before long, Beauty Shoppe approached Picker about taking over the building outright.
“We had to make a decision,” she says. “Do we say no and then they’d be likely to leave, or do we say yes and change the nature of the building with them? We chose the latter, which is a really exciting option because I think innovation in neighborhoods like East Liberty and cities like Pittsburgh is absolutely essential.”
Under the agreement, Beauty Shoppe will operate the building as if they were a hotel operator. Membership dues, not rent, will provide the owners with income. Beauty Shoppe will continue to operate the facility, and the owners will furnish the furniture and supplies needed to run the operation as a coworking space.
There’s just one problem: traditional financing won’t work for this unconventional model. The owners anticipate needing approximately $800,000-$900,000 for renovations over the next two years, but the banks they approached couldn’t find a way to appraise the business model, so they wouldn’t extend a line of credit.
Fortunately, an alternative source of financing was apparent: Picker is the founder of Small Change, a real estate equity crowdfunding platform for projects that can “transform cities for the better.” (Picker was just named one of eight Global Urban Innovators by the NewCities Foundation for her work with Small Change.)
“This is exactly why Small Change is in existence,” says Picker. “Banks are not able to lend in neighborhoods that need help, or for projects that are innovative and first-time. For all those projects that we want to see that make cities like Pittsburgh better, or our neighborhoods better, it’s very difficult to finance them, and that’s the role we want to fill.”
Accredited investors can donate to the project through the Small Change website. As of May 15, 22 percent of the $300,000 goal has been raised. There is a 10 percent projected return on debt instrument, and a full return of interest and capital is anticipated within three years.
It’s one of several big moves for Beauty Shoppe in recent months, which recently took over management of co-working operations at nearby Ascender and will expand into Cleveland this fall. Memberships cost $125 a month and there is currently a two-year waitlist to join.
“This opportunity with Small Change will allow us to double our size in this location,” says Beauty Shoppe founder and partner, Zach Ciccone. “We will be able to offer new amenities to our members and their growing businesses and organizations, as well as provide those amenities and access to space at an affordable price back to the neighborhood.”